Court of Appeal finds that factual information received by solicitor in course of acting for client was not privileged

In a recent decision, the Court of Appeal held that a solicitor could not object on grounds of privilege to giving evidence, where the questions related to factual information received by the solicitor from third parties in the course of acting for his client: Kerman v Akhmedova [2018] EWCA Civ 307.

The decision is based, at least in part, on the well-established principle that communications with a third party are not covered by legal advice privilege, which is confined to lawyer / client communications for the purpose of giving or obtaining legal advice. Third party communications can only be privileged, if at all, under litigation privilege, which applies to documents or communications prepared for the dominant purpose of litigation which is in reasonable contemplation. Here, the information in question was obtained by the solicitor from third parties, and did not relate to contemplated litigation. Accordingly, there was no basis for a claim to privilege.

The Court of Appeal’s decision appears to go further, however, suggesting that a solicitor cannot refuse to answer questions on grounds of privilege where the client would not be able to do so. That statement is uncontroversial if it is limited to where, as in this case, the information is obtained from third parties in circumstances where litigation privilege is not available. If however it is intended to include situations where the solicitor has obtained the information solely by means of a privileged communication from the client, that is a much more contentious proposition, going beyond authorities to date, and would appear to risk undermining the privilege.

Background

This was an appeal against an order requiring the appellant (Mr Kerman) to attend court to give evidence relating to certain affairs of his clients (the husband in financial remedy proceedings and the husband’s nominee company). The application was brought by the wife, who had obtained an order for payment of some £453 million, including an order for the transfer to her of a property, an Aston Martin and a modern art collection valued at some £90 million.

As well as requiring Mr Kerman to attend court to give evidence, the witness summons contained a so-called gagging order preventing Mr Kerman tipping off his clients.

Mr Kerman attended court but objected on grounds of privilege to certain questions about his role in arranging insurance for the modern art collection and about his clients’ assets.

The judge (Haddon-Cave J) rejected the claim to privilege on the basis that the husband’s conduct in seeking to hinder or prevent the enforcement of the wife’s claim had been seriously iniquitous, so that the fraud or iniquity exception to privilege applied. He also appeared to accept, though without deciding, that Mr Kerman had been acting as a “man of business”, rather than a legal adviser, in relation to the matters in question, which would also mean that privilege did not apply. Mr Kerman appealed.

Decision

The Court of Appeal dismissed the appeal, finding that the matters in question were not privileged, though for different reasons to Haddon-Cave J. Sir James Munby (the President of the Family Division) gave the leading judgment with which Lewison and King LJJ agreed.

Sir James noted that it was clear from the transcript that the questioning of Mr Kerman was confined to two factual topics (his emphasis): Mr Kerman’s involvement in the insurance arrangements for the art collection; and his knowledge of the nominee company’s banking arrangements and the transfer of its funds from Switzerland to Liechtenstein. Importantly, Sir James said, Mr Kerman was not asked about his dealings with his clients, his instructions from them, or his communications with them, let alone about any advice he may have given them.

Sir James referred, with obvious approval, to the submission of the wife’s advocate before Haddon-Cave J that, if these questions had been put to the husband, he would not have been able to rely on privilege as a reason for refusing to answer – and his rhetorical question as to why Mr Kerman should be able to rely on a privilege which would not be available to his client.

Sir James then referred to the wife’s current advocate’s submission that the documentation and information sought from Mr Kerman related to communications with third parties, which are not protected by legal advice privilege. Mr Kerman had no effective answer to this, and had to concede that communications between a solicitor and third party are not privileged.

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